<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 814-48
TECHNOLOGY FUNDING PARTNERS III, L.P.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3033783
- ------------------------------ ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(650) 345-2200
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
No active market for the units of limited partnership interest ("Units")
exists, and therefore the market value of such Units cannot be
determined.
<PAGE>
I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
(unaudited)
June 30, December 31,
1998 1997
------------ -----------
<S> <C> <C>
ASSETS
Equity investments (cost basis
of $23,422,734 and $23,563,459 for
1998 and 1997, respectively) $24,298,932 25,545,207
Cash and cash equivalents 3,533,555 4,304,928
Other assets 8,073 5,433
---------- ----------
Total assets $27,840,560 29,855,568
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 39,375 66,748
Due to related parties 47,993 80,533
Other liabilities 16,671 17,009
---------- ----------
Total liabilities 104,039 164,290
Commitments, contingencies and
subsequent events (Notes 2, 3 and 6)
Partners' capital:
Limited Partners
(Units outstanding of 160,000
in both 1998 and 1997) 27,004,575 27,670,313
General Partners (144,252) 39,217
Net unrealized fair value increase
from cost of equity investments 876,198 1,981,748
---------- ----------
Total partners' capital 27,736,521 29,691,278
---------- ----------
Total liabilities
and partners' capital $27,840,560 29,855,568
========== ==========
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------------------ -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Notes receivable interest $ 40 8,721 10,697 42,792
Short-term investment interest 35,763 97,145 79,423 167,160
Other income 229 3,125 352 3,125
------- --------- --------- ---------
Total income 36,032 108,991 90,472 213,077
Costs and expenses:
Management fees 71,291 85,509 145,930 170,235
Individual General Partners'
compensation 15,139 13,128 22,553 21,450
Operating expenses:
Administrative and investor services 143,875 101,846 303,942 210,107
Investment operations 38,727 105,482 195,582 171,824
Professional fees 22,832 43,174 34,892 60,261
Computer services 30,401 26,076 98,081 55,188
------- --------- --------- ---------
Total operating expenses 235,835 276,578 632,497 497,380
------- --------- --------- ---------
Total costs and expenses 322,265 375,215 800,980 689,065
------- --------- --------- ---------
Net operating loss (286,233) (266,224) (710,508) (475,988)
Net realized gain (loss) from sales
of equity investments 141,600 1,150,059 (210,423) 5,692,759
Realized gains from venture capital
limited partnership investments 49,541 367,066 71,724 512,349
------- --------- --------- ---------
Net realized (loss) income (95,092) 1,250,901 (849,207) 5,729,120
Change in net unrealized
fair value of equity investments (611,982) (79,043) (1,105,550) (4,147,983)
------- --------- --------- ---------
Net (loss) income $(707,074) 1,171,858 (1,954,757) 1,581,137
======= ========= ========= =========
Net realized income (loss) per Unit $ -- 7 (4) 32
======= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
-----------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Interest and other income received $ 78,710 170,282
Cash paid to vendors (115,060) (153,568)
Cash paid to related parties (748,811) (572,450)
--------- ----------
Net cash used by operating
activities (785,161) (555,736)
--------- ----------
Cash flows from investing activities:
Notes receivable issued (35,962) --
Purchase of equity investments (953,565) (4,837,992)
Proceeds from sales of
equity investments 531,416 9,273,156
Repayments of convertible and
other notes receivable 450,712 --
Distributions from venture capital
limited partnerships 21,187 369,296
--------- ----------
Net cash provided by
investing activities 13,788 4,804,460
--------- ----------
Cash flows from financing activities:
Distributions to Limited and General
Partners -- (4,279,267)
--------- ---------
Net cash used by financing activities -- (4,279,267)
--------- ---------
Net decrease in cash
and cash equivalents (771,373) (30,543)
Cash and cash equivalents at beginning
of year 4,304,928 5,317,251
--------- ----------
Cash and cash equivalents
at June 30 $3,533,555 5,286,708
========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1998 1997
---------- ----------
<S> <C> <C>
Reconciliation of net (loss) income to net
cash used by operating activities:
Net (loss) income $(1,954,757) 1,581,137
Adjustments to reconcile net loss (income)
to net cash used by operating activities:
Net realized loss (gain) from sales of
equity investments 210,423 (5,692,759)
Realized gains from venture capital
limited partnership investments (71,724) (512,349)
Change in net unrealized fair value of
equity investments 1,105,550 4,147,983
Changes in:
Due to related parties (32,540) (44,848)
Other changes, net (42,113) (34,900)
--------- ---------
Net cash used by operating activities $ (785,161) (555,736)
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Managing General Partners, the accompanying interim
financial statements reflect all adjustments necessary for a fair
presentation of the financial position, results of operations, and cash
flows for the interim periods presented. These statements should be read
in conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1997. Allocation of income and loss to Limited and General
Partners is based on cumulative income and loss. Adjustments, if any,
are reflected in the current quarter balances.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party expenses for the six months
ended June 30, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
Management fees $145,930 170,235
Reimbursable operating expenses 547,788 335,917
Individual General Partners'
compensation 22,553 21,450
</TABLE>
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partners and are adjusted to
actual costs periodically. There were $25,345 and $23,172 of such
expenses due to related parties at June 30, 1998, and December 31, 1997,
respectively.
Amounts due to related parties for management fees were $22,648 and
$57,361 at June 30, 1998, and December 31, 1997, respectively.
Officers of the Managing General Partners occasionally receive stock
options as compensation for serving on the Boards of Directors of
portfolio companies. At June 30, 1998, the Partnership had an indirect
interest in Conversion Technologies, Inc., Electronic Designs, Inc.,
Endocare, Inc. and PolyMedica Industries, Inc. non-transferable options
at an exercise price higher than the current market value.
3. Equity Investments
------------------
<TABLE>
A complete listing of the Partnerships equity investments at December 31, 1997 is in the 1997
Annual Report. Activity from January 1 through June 30, 1998 consisted of:
<CAPTION>
January 1
through June 30, 1998
----------------------
Principal
Investment Amount or Cost Fair
Industry/Company Position Date Shares Basis Value
- ---------------- -------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 $23,563,459 25,545,207
---------- ----------
Significant changes:
Communications
- --------------
NetChannel, Series B
Inc. Preferred 10/96-
shares 05/97 2,384,983 (832,864) (1,259,473)
NetChannel, Convertible
Inc. notes various $390,372 (401,529) (401,529)
NetChannel, Escrowed sales
Inc. proceeds 06/98 $161,983 161,983 161,983
Women.com Series D
Networks Preferred
shares 06/98 121,581 400,001 400,001
Computers and Computer Equipment
- --------------------------------
Electronic Common
Designs, Inc. shares various 645,477 0 (1,009,978)
Computer Systems and Software
- -----------------------------
Geoworks Common 06/94-
Corporation shares 02/97 115,110 0 (640,817)
Electronic Design Automation
- ----------------------------
Cadence Design Common
Systems, Inc. shares 07/96 24,000 0 224,160
Synopsys, Inc. Common
shares 02/97 14,000 0 118,272
Environmental
- -------------
Conversion Technologies Series A
International, Inc. Preferred 08/97-
shares 09/97 236,250 0 (81,211)
Thermatrix, Common
Inc. shares 06/96 65,970 0 168,352
Medical/Biotechnology
- ---------------------
CareCentric Solutions, Convertible 04/98-
Inc. notes (1) 06/98 $96,250 97,316 97,316
CardioTech Common
International, shares
Inc. 06/96 195,600 0 (153,937)
Endocare, Common 08/96-
Inc. shares 01/97 309,000 0 (130,260)
Endocare, Common
Inc. shares 04/98 71,248 250,002 214,171
Lifecell Common
Corporation shares various 351,060 0 565,207
Neurex Common
Corporation shares 09/96 3,379 (70,959) (45,448)
Matrix Common
Pharmaceuticals, shares
Inc. various 321,633 0 318,417
Pharmadigm, Series A
Inc. Preferred 04/93-
shares 12/94 268,546 0 59,140
Pharmadigm, Series D
Inc. Preferred
shares 06/98 82,438 199,500 199,500
Venture Capital Limited Partnership Investments
- -----------------------------------------------
Various Limited
Partnership
Interests various $3,962,658 (40,230) (163,426)
---------- ----------
Total significant changes during the six months
ended June 30, 1998 (236,780) (1,359,560)
Other changes, net 96,055 113,285
---------- ----------
Total equity investments at June 30, 1998 $23,422,734 24,298,932
========== ==========
(1) Convertible notes include accrued interest. The interest rate on notes issued in 1998 was
10%
</TABLE>
Marketable Equity Securities
- ----------------------------
At June 30, 1998, and December 31, 1997, marketable equity securities had
aggregate costs of $8,398,464 and $9,469,098, respectively, and aggregate
fair values of $8,537,657 and $9,080,006, respectively. The net
unrealized gain and loss at June 30, 1998, and December 31, 1997,
respectively, included gross gains of $2,399,710 and $1,898,488,
respectively.
CareCentric Solutions, Inc.
- ---------------------------
In the second quarter of 1998, the Partnership issued $96,250 in
convertible notes receivable to the company.
Endocare, Inc.
- --------------
In April 1998, the Partnership purchased 71,248 common shares for $250,002
in a private placement. At June 30, 1998, the Partnership recorded a
$214,523 decrease in the fair value of its investment based on the
publicly-traded market price of the company's common shares.
NetChannel, Inc.
- ----------------
In June 1998, America Online, Inc., completed its acquisition of the
company. Based on the expected sales proceeds, the Partnership recorded a
realized loss of $342,948 at March 31, 1998. This loss was later adjusted
to $201,349 on the completion of the sale transaction. In June 1998,
proceeds of $469,533 and $450,712 were received from the sale of the
Partnership's preferred shares and repayment of convertible and other notes
receivable. An amount of $161,983 in future sale proceeds will remain in
escrow through December 1999 pending final resolution of the sale.
Neurex Corporation
- ------------------
In February 1998, the Partnership sold 3,379 common shares for total
proceeds of $61,884 and realized a loss of $9,075.
Pharmadigm, Inc.
- ----------------
In June 1998, the Partnership made an additional investment in the company
by purchasing 82,438 Series D Preferred shares for $199,500. The pricing
of this round, in which third parties participated, indicated a $76,419
increase in the fair value of the Partnership's existing investment.
Women.com Networks (formerly Wire Networks, Inc.)
- -----------------------------------------------
In February 1998, the company changed its name from Wire Networks, Inc. to
Women.com Networks. In June 1998, the Partnership made an additional
investment in the company by purchasing 121,581 Series D Preferred shares
for $400,001. The pricing of this round, in which third parties
participated, indicated a $106,378 increase in the fair value of the
Partnership's existing investment.
Venture Capital Limited Partnerships
- ------------------------------------
The Partnership made additional investments totaling $7,812 in venture
capital limited partnerships during the six months ended June 30, 1998.
The Partnership received cash distributions of $21,187 from Batterson,
Johnson and Wang, L.P., Delphi Ventures, L.P., and Trinity Ventures IV,
L.P. The Partnership also received stock distributions of PRI Automation,
Inc., Hybridon, Inc., Neurex Corporation, NewsEDGE Corporation and OraVax,
Inc. with fair values of $1,355, $42,161, $5,522, $46,882 and $2,659,
respectively. Distributions totaling $71,724 were recorded as realized
gains and distributions totaling $48,042 were recorded as returns of
capital.
The Partnership recorded a $163,426 decrease in fair value as a result of
a net decrease in the fair value of the underlying investments of the
partnerships, caused, in part, by distributions received from such
partnerships.
Other Equity Investments
- ------------------------
Other significant changes reflected above relate to market value
fluctuations or the elimination of a discount relating to selling
restrictions for publicly-traded portfolio companies. Portions of the
Partnership's Conversion Technologies International, Inc., Electronic
Designs, Inc., and Thermatrix, Inc. investments are restricted.
Subsequent to quarter end, the fair value of the Partnership's investments
in Electronic Designs, Inc., Lifecell Corporation and Matrix
Pharmaceuticals declined by $448,307, $578,652 and $369,678, respectively,
as a result of a decrease in the publicly traded market price at August
11, 1998.
4. Notes Receivable
----------------
During the six months ended June 30, 1998, the Partnership issued $35,962
in notes receivable with an interest rate of 8%. The notes were repaid in
full prior to June 30, 1998.
5. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at June 30, 1998, and December 31, 1997,
consisted of:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Demand accounts $ 57,001 60,609
Money-market accounts 3,476,554 4,244,319
--------- ---------
Total $3,533,555 4,304,928
========= =========
</TABLE>
6. Commitments and Contingencies
-----------------------------
The Partnership is a party to financial instruments with off-balance-sheet
risk in the normal course of its business. Generally, these instruments
are commitments for future equity investment fundings, venture capital
limited partnership investments, equipment financing commitments, or
accounts receivable lines of credit that are outstanding but not currently
fully utilized by a borrowing company. As they do not represent current
outstanding balances, these unfunded commitments are properly not
recognized in the financial statements. At June 30, 1998, the Partnership
had unfunded commitments for venture capital limited partnership
investments of $7,805.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
During the six months ended June 30, 1998, net cash used by operating
activities totaled $785,161. The Partnership paid management fees of
$180,643 to the Managing General Partners and reimbursed related parties
for operating expenses of $545,615. In addition, $22,553 was paid to the
Individual General Partners as compensation for their services. Other
operating expenses of $115,060 were paid and $78,710 in interest and other
income was received.
During the six months ended June 30, 1998, the Partnership funded equity
investments of $953,565 primarily to portfolio companies in the
communications and medical/biotechnology industries and issued $35,962 in
notes receivable to a portfolio company in the communications industry.
Proceeds from equity investment sales were $531,416 and repayments of
convertible and other notes receivable provided $450,712. Cash
distributions of $21,187 were received from venture capital limited
partnership investments.
Cash and cash equivalents at June 30, 1998, were $3,533,555. Cash
reserves, interest income on short-term investments, and future proceeds
from equity investment sales are expected to be adequate to fund
Partnership operations and future investments through the next twelve
months.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net loss was $707,074 for the three months ended June 30, 1998, as
compared to net income of $1,171,858 for the three months ended June 30,
1997. The change was primarily due to a $1,008,459 decrease in net
realized gains from equity investment sales, a decrease of $532,939 in the
change in net unrealized fair value of equity investments, and a $317,525
decrease in realized gains from venture capital limited partnership
investments.
Net realized gain from sales of equity investments was $141,600 for the
quarter ended June 30, 1998, as compared to a net realized gain of
$1,150,059 for the quarter ended June 30, 1997. The gain in 1997
primarily related to sales of PolyMedica Industries, Inc.
The Partnership recorded a decrease in fair value of equity investments of
$611,982 during the quarter ended June 30, 1998 primarily due to decreases
in portfolio companies in the computer systems and software and computer
and computer equipment industries, partially offset by increases in the
medical industry. During the same period in 1997 the decrease in fair
value of equity investments of $79,043 was substantially attributable to
the sale of Geoworks common stock, as the gain was realized, and a
decrease in a portfolio company in the computer systems and software
industry.
Realized gains from venture capital limited partnership investments
totaled $49,541 and $367,066 for the quarters ended June 30, 1998 and
1997, respectively.
Operating expenses were $235,835 for the quarter ended June 30, 1998,
compared to $276,578 for the same period in 1997.
Given the inherent risk associated with the business of the Partnership,
the future performance of the portfolio company investments may
significantly impact future operations.
Current six months compared to corresponding six months in the preceding
- ------------------------------------------------------------------------
year
- ----
Net loss was $1,954,757 for the six months ended June 30, 1998, as
compared to net income of $1,581,137 for the six months ended June 30,
1997. The decrease was primarily due to a $5,903,182 decrease in net
realized gain from sales of equity investments, a $440,625 decrease in
realized gains from venture capital limited partnership investments, a
$135,117 increase in operating expenses, and a $122,605 decrease in total
income. These decreases were partially offset by a $3,042,433 increase in
the change in net unrealized fair value of equity investments.
Net realized loss from sales of equity investments was $210,423 for the
six months ended June 30, 1998 as compared to a net realized gain of
$5,692,759 for the six months ended June 30, 1997. The loss in 1998
primarily related to the sale of NetChannel, Inc. The gain in 1997
primarily related to sales of Geoworks Corporation, PolyMedica Industries,
Inc., TheraTx, Inc., and Systemix, Inc.
Realized gains from venture capital limited partnership investments were
$71,724 and $512,349 for the six months ended June 30, 1998 and 1997,
respectively.
Operating expenses for the six months ended June 30, 1998 and 1997 were
$632,497 and $497,380, respectively. The increase is attributable to
increased investment monitoring activities, administrative costs and
development costs associated with enabling investors to access on-line
account information.
Total income for the six months ended June 30, 1998 decreased to $90,472
from $213,077 for the six months ended June 30, 1997. The decrease is
primarily due to a decrease in interest earned on short-term investments
due to lower cash balances.
During the six months ended June 30, 1998, the decrease in fair value of
equity investments of $1,105,550 was primarily due to decreases in
portfolio companies in the computer and computer equipment and computer
systems and software industries, partially offset by increases in the
medical industry. During the comparable period of 1997, the decrease of
$4,147,983 was substantially attributable to the sales of Geoworks common
stock, as the gain was realized.
II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) No reports on Form 8-K were filed by the Partnership during the
quarter ended June 30, 1998.
b) Financial Data Schedule for the six months ended and as of June 30,
1998 (Exhibit 27).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TECHNOLOGY FUNDING PARTNERS III, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: August 12, 1998 By: /s/Michael R. Brenner
------------------------------------
Michael R. Brenner
Controller
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-Q AS OF JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<PERIOD-TYPE> 6-MOS
<INVESTMENTS-AT-COST> 23,422,734
<INVESTMENTS-AT-VALUE> 24,298,932
<RECEIVABLES> 0
<ASSETS-OTHER> 8,073
<OTHER-ITEMS-ASSETS> 3,533,555
<TOTAL-ASSETS> 27,840,560
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 104,039
<TOTAL-LIABILITIES> 104,039
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,860,323
<SHARES-COMMON-STOCK> 160,000
<SHARES-COMMON-PRIOR> 160,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 876,198
<NET-ASSETS> 27,736,521
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 90,120
<OTHER-INCOME> 352
<EXPENSES-NET> 800,980
<NET-INVESTMENT-INCOME> (710,508)
<REALIZED-GAINS-CURRENT> (138,699)
<APPREC-INCREASE-CURRENT> (1,105,550)
<NET-CHANGE-FROM-OPS> (1,954,757)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,954,757)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145,930
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 806,405
<AVERAGE-NET-ASSETS> 28,713,899
<PER-SHARE-NAV-BEGIN> 173
<PER-SHARE-NII> (4)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 169
<EXPENSE-RATIO> 2.8
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
A zero value is used since the change in net unrealized fair value is not
allocated to General Partners and Limited Partners as it is not taxable.
Only taxable gains or losses are allocated in accordance with the
Partnership Agreement.
</FN>
</TABLE>
